PHOENIX—How do you underwrite for the future? For Millenials? How do you look at deals three years out? Those were some key questions coming from moderator Judi Butterworth, SVP of Velocity Retail Group, to panelists at this year's RealShare Phoenix Metro conference, which drew nearly 200 in attendance.
According to Michael Klein, co-founder, COO and managing director of Partners Capital Solutions Inc., that is the very reasons they do very little office. "Things are constantly changing…there are a lot of issues with office so we are careful." He explained that expenses are constantly going up as are rents. "The deals that make sense are hard to find."
Steven Schwarz, founding partner of ViaWest Group, said that the world is going to get used to things being a bit different."We are catering to a more entrepreneurial world," he said. "We want to see the merging of institutional and entrepreneurial world. You may not like them walking around in flip flips, but the world will collide on that and you need to be open to it and allow it to happen."
But Schwarz agreed that office can be challenging. "We go in and look at how we can build out space that will have a residual value long term no matter who it is that is in there," he said. "There will be some changes over time, and 15 years from now, it will be a different story."
As for where the panelists find value add and in what products, Klein says his firm finds value add in starting all over or starting fresh. "We see value in ground up construction," he said. "There are still some retail value-add deals out there but they are hard to find. In residential, we are seeing it in multifamily but there is not a lot of low hanging fruit anymore."
Elliot Shirwo, EVP of Bolour Associates, explained that the value add deals his firm has seen are probably 90% predevelopment deals. Many of the deals need to be entitled, and many are spooked by the re-entitlement process, he added. Even providing temporary uses for a property, Shirwo adds, provides lots of opportunity.
But there are a lot of ways to define value-add, added Schwarz. "Some of it is top down. We are seeing opportunities in industrial. On the office front, there are definitely a few opportunities there, but not as many. It is really deal by deal for value-add. Sometimes it is inefficiency that remains in the market."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
